In this episode of Street Cred, Chris Krueger, Macro Policy Analyst, discusses six wild cards for the 2024 election:
- The economy and concerns over inflation
- Third party challengers and their role as potential spoilers
- Trump’s trials and the possibility of a Biden impeachment
- Summer conventions
- Congressional races
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Good morning. Welcome back to TD Cowen’s Street Cred. I am Chris Krueger with TD Cowen’s Washington Research Group, and we’ll attempt to translate K Street to Wall Street faster than a speeding Acela, and even faster if you juice up the playbook. Really crushing our 2024 resolutions with our second pod this month. Our inaugural pod attempted to try and make sense of 2024 by breaking the year into three separate tracks that were running parallel, and of course now have all intersected. On today’s pod, which was recorded on January 25th, so fair warning if everything has changed, we’re flagging six wildcards for the 2024 election. All right, here we go. Buckle up.
The number one wildcard to watch. No surprise, the economy. If you look at the presidents who have lost reelection since World War II, Gerald Ford, Jimmy Carter, George HW Bush, and Trump, they all share at least one commonality, and that is a recession. We are in a new bizarre political dynamic where people sometimes vote against their own economic interests as politics seems to have devolved into a type of Lord of the Flies dynamic, but that’s where we are. Back in the day, your economic situation largely determined your political views. Now your political views tend to determine how you feel about your economic situation, but the economy remains a huge wildcard. Reminder, the stock market is not the economy. Among voters, inflation remains a top three issue across multiple cohorts, along with crime and the border. This is very regionalized and that is reflected in our politics and our representation in Washington. The big five swing states that will determine the electoral college, Georgia, Arizona, Michigan, Wisconsin, and Pennsylvania, all have 50-year near low unemployment.
All right, number two, wildcard to watch, abortion. Monday, January 22nd was the 51st anniversary of the now overturned Roe v. Wade. Democrats kicked off an ad blitz focused on reproductive rights, with campaign appearances by both Biden and Harris all during the week. Biden’s polling is historically bad and has been for two years now, but Democrats have won nearly all bellwether races and all seven statewide ballot questions on reproductive rights since June of 2022, with the Dobbs decision overturning Roe v. Wade. So that tailwind on abortion led by the 2022 midterms and the 2023 off-cycle races in Virginia continues to be a huge narrative and a big wildcard to watch. In New Hampshire on Tuesday, 67% of Republican primary voters said they oppose a federal law banning most or all abortions nationwide per a NBC News exit poll. That’s among Republican primary voters. This issue really resonates with independence along with democracy and reaffirming the 2020 election results, and that largely explained the 2022 midterms, the so-called Roe wave eclipsed the red wave.
You do have a Supreme Court case this summer on abortion pills and a number of ballot initiatives that are going to keep this issue front and center, which the Democrats hope can continue to provide that electoral tailwind that has been blowing since the Dobbs decision in the summer of 2022.
Wildcard number three, third parties. Given Trump’s win in Iowa and New Hampshire, this is a critical issue to watch in the run-up to the summer conventions given ballot access questions and others. It’s clear that a large swath of Americans do not want to see a Biden-Trump rematch, but that’s very likely what we have. Important to flag that Trump has a meaningful enthusiasm advantage over Biden. Trump’s base really, really passionate and there for Trump. It’s been said Trump has the highest floor but the lowest ceiling. He remains the zeitgeist of American politics. A lot of Biden voters aren’t so much voting for Biden as much as voting against Trump. Keep in mind, Biden barely won in 2020, and that was largely due to the campaign’s focus on keeping the typical third-party progressive types off the ballot and uniting everyone against Trump. That’s not the case this time around, with both Cornell West and Jill Stein running to Biden’s left. Don’t forget that Jill Stein’s vote in 2016 in Michigan, Wisconsin and Pennsylvania, her vote totals were larger than Trump’s win margins, so margins here really, really matter.
The No Labels Effort has said it will make a decision in March. That’s a centrist organization looking to run both a Republican and Democrat on the ticket. We view this as a potentially death knell to Biden, so stay tuned on that decision in March. The only third party candidate we see as really hurting Trump is RFK Jr., and I think that’s reinforced by the Trump campaign attacks on RFK while Biden is largely ignoring that candidacy. Can any of these folks win? In our estimation, no. The high watermark for third-party candidates in recent years was in 1992 with Ross Perot, who took nearly 19% of the popular vote and got zero electoral votes. But again, margins matter and the third-party candidates could well be spoilers like they were in ’92, in 2000 with Ralph Nader. And in 2016 with Jilt Stein.
All right, we’re past the midway mark. Wildcard number four, the Trump trials and Biden impeachment. The first of Trump’s four criminal trials is largely going to trump, sorry, a Biden impeachment that seems to candidly not really be moving. That could be for a host of reasons, to say nothing of the fact that there’s only a two-seat majority in the House right now, and any impeachment in the house would go nowhere in the Senate. You need two thirds of the Senate to convict. That’s never happened. Reverting to the Trump trials, three out of 10 Trump voters from the Iowa caucus said they would not vote for a candidate who had been convicted. So thus far, the indictments have made Trump stronger politically. Even his former challenger, Ron DeSantis, said as much. That very well could change with potential convictions. Look, there’s not a lot of precedence here. This has literally never happened.
The other aspect to watch in all of this is going to be Trump’s reaction to all of this. And if the civil trials are any guide, Trump’s reaction is likely to alienate those soft Republican and independent voters who are going to be critical in November as they were in 2020.
All right, wildcard number five, the conventions. Both Biden and Trump are likely the mathematical and defacto nominees for their parties by mid-March, but you’re not the official candidate until the delegates vote at the summer conventions. So if there’s going to be a candidate change, it’s going to have to be between now and those conventions. The Republicans are first in Milwaukee in mid-July. The Democrats follow in mid-August in Chicago. So, look, we’ve never had candidates this old, so if there’s any type of health situation, any type of legal situation or any just straight-up political calculation to change the nominees, that has to happen at the conventions. Keep in mind the voting ends on November 5th. Early voting starts in some states in September. More than half of the ballots will likely have been cast by election day. So once you get out of the conventions, that’s it. The tickets are locked.
Final wildcard, the undercard. I think folks sometimes forget that it’s not just the White House, it’s the Senate and the House, which are massively important for legislation, particularly with the upcoming tax cliff. All of the 2017 Tax Cuts and Jobs Act individual changes all expire at the end of next year. $4 trillion tax increase. The Obamacare subsidies also expire at the end of next year. Just real quick, the historically tight margins in Congress are natural results from the unbelievably narrow previous two elections. The Senate is 51-49 right now, and the house is a two-seat House majority or governing majority for the Republicans. The 2020 presidential election was decided by fewer than 43,000 combined votes in Arizona, Georgia, and Wisconsin. Margin was even closer in 2022, fewer than 12,000 combined votes among five districts flipped the House.
In terms of the geography here, the Senate is largely going to be fought in the key electoral college states, along with Ohio, Montana, and West Virginia. So as good as the geography is for Republicans in the Senate, it’s reversed in the House. The House is largely going to be fought in California, New York, and the suburbs. There are currently 17 House Republicans in districts Biden won in 2020, and only five house Democrats in Trump-won districts. You layer in the redistricting changes that are benefiting Democrats and it’s, in our minds, a very good chance that the House flips to the Democrats, whereas it’s also a very good chance that the Senate flips to the Republicans. So for the first time in history, the House and Senate could flip to opposite parties in a single election, very on brand for 2024.
Okay, that’s a wrap. This has been Chris Krueger with TD Cowen’s Washington Research Group for Street Cred. Have a great weekend. Have to say this as the father of a nine-year-old daughter and passionate Swiftie. Go Chiefs.
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.
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